European stocks closed little changed as investors watched U.S. lawmakers debate a new budget agreement to avoid automatic tax increases and spending cuts in the world’s largest economy.
A gauge of the region’s oil and gas companies declined, with Total SA (FP) losing 0.7 percent. Alcatel-Lucent SA surged 7 percent after saying it reached a $2.1 billion financing deal with Goldman Sachs Group Inc. and Credit Suisse Group AG. (CSGN) Akzo Nobel NV (AKZA) jumped 7.1 percent after agreeing to sell its North American decorative-paints business to PPG Industries Inc.
The Stoxx Europe 600 Index slipped less than 0.1 percent to 279.4 in London. The measure has rallied 19 percent since this year’s low on June 4 as the European Central Bank and the Federal Reserve expanded asset purchases.
“Market sentiment is likely to be shaped entirely by the US fiscal cliff negotiations,” said Nicholas Spiro, managing director of Spiro Sovereign Strategy in London. “With just 17 days to go before the automatic spending cuts and tax increases kick in, a deal still appears elusive, making it likely that the last two full trading weeks of 2012 will be nail-biting ones.”
The Stoxx 600 yesterday fell for the first time this month as Fed Chairman Ben S. Bernanke said the central bank doesn’t have the tools to offset the economic impact of automatic deficit-reduction measures called the fiscal cliff that will come into effect next year if Congress fails to reach a deal.
U.S. President Barack Obama and House Speaker John Boehner met yesterday to discuss averting more than $600 billion of spending cuts and tax increases before a year-end deadline, with no public announcement of progress.
Obama and congressional Democrats have said they won’t discuss spending cuts unless Republicans agree to higher tax rates for top earners. Republicans are insisting on reductions to entitlement programs such as Medicare.
Industrial production in the world’s largest economy increased 1.1 percent in November, after a revised 0.7 percent drop the previous month, the Federal Reserve said today. That beat the median forecast in a Bloomberg survey that called for a 0.3 percent gain.
In China, a report showed manufacturing may expand at a faster pace this month. The December preliminary reading was 50.9 for a purchasing managers’ index released today by HSBC Holdings Plc and Markit Economics. That compares with the 50.8 median projection in a Bloomberg News survey.
The Shanghai Composite Index jumped the most since October 2009 also on speculation that state-backed institutions were buying shares.
In the euro area, a preliminary report showed that a measure of manufacturing climbed to 46.3 in December, up from 46.2 in the previous month. A composite index that also includes services jumped to 47.3 this month, the highest since March, from 46.5 in November. A reading below 50 means contraction.
A gauge of oil and gas companies fell for a second day, with Total losing 0.7 percent to 39.46 euros.
Fiat SpA, which owns 58.5 percent in Chrysler Group LLC, dropped 1.9 percent to 3.63 euros. Il Messaggero reported that Chief Financial Officer Richard Palmer held meetings with banks on a possible capital increase to fund its acquisition of the remaining 41.5 percent of Chrysler.
Alcatel-Lucent rallied 7 percent to 91.3 euro cents after saying it will get a $2.1 billion multiyear financing commitment from Goldman Sachs and Credit Suisse. The deal “provides stabilization and enhances Alcatel-Lucent’s liquidity profile,” the company said.
Akzo Nobel advanced 7.1 percent to 48.70 euros, the biggest jump since September 2011, after PPG Industries agreed to buy its North American decorative-paints business for $1.05 billion.
ProSiebenSat.1 Media AG (PSM) rallied 1.8 percent to 23.66 euros after Discovery Communications Inc. agreed to buy the German broadcaster’s northern European assets.
Swatch Group AG (UHR), the biggest maker of Swiss watches, jumped 3.8 percent to 464.80 Swiss francs, the highest price since at least July 1993, after Morgan Stanley raised the stock to overweight from underweight, meaning investors should buy the stock.
Centamin Plc (CEY), which plunged 47 percent yesterday after a fuel dispute halted production at its gold mine in Egypt, surged 25 percent to 34.64 pence today. The company said Chevron, Centamin’s fuel supplier, had been notified by Egyptian General Petroleum Corp. that fuel supply may be resumed.
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